Compensation management involves attracting and retaining employees through competitive pay and benefits. It aims to motivate high performance through salaries, bonuses, incentives, and fringe benefits like health insurance and retirement plans. Effective compensation management considers an organization's goals and integrates reward strategies accordingly. It helps ensure employees feel valued and incentivized to increase productivity, while meeting their needs for fair compensation.

1. COMPENSATION
MANAGEMENT

2.  WHAT IS COMPENSATION PAYMENT
 PURPOSE AND OBJECTIVES OF COMPENSATION
 WHAT IS COMPENSATION MANAGEMENT
 NEED OF COMPENSATION MANAGEMENT
 TYPES OF COMPENSATION
 SALARY SLIP
 SALARY SLIP STRUCTURE
 EMPLOYEES COMPENSATION PACKAGES
 FRINGE BENEFITS
 TYPES OF FRINGE BENEFITS
 FEATURES OF FRINFE BENEFITS
 FRINGE BENEFITS IN INDIAN SCENARIO
 PERFORMANCE LINKED INCENTIVES
 MEANING OF INCENTIVES PLAN
 FEATURES OF GOOD INCENTIVE PLANS
 TYPES OF INCENTIVE PLAN

3. What is compensation payment

4. Cont……
Is an integral part of human resource management which
helps in.
Motivating the employees and improving organizational
effectiveness .
If the compensation offered is effectively managed , it
contributes to high organizational productivity .

5. Purposes and Objectives of Compensation
 The organization must provide appropriate and equitable rewards
to employees .
 Individuals who work for organizations want to feel valued .
 Want to be rewarded at a level commensurate with their skills
, abilities and contributions to the organization .
 Compensation serves a ( signaling ) function .
 Organizations signal to employees what they feel is important or
the employee to focus on..
 (And what they feel is less important )by paying for certain kinds
of activities or behaviors and not for others .
 Compensation can serve as an incentive to employees to increase
their efforts along desired lines

6. What is compensation management
Is more than just the means to attract and retain talented
employees .
“Compensation management is a strategic activity that
helps an organization improve the effectiveness of its
employee reward processes. “
This requires integrating employee processes , information
and programs with organizational processes and strategies
to achieve optimal organizational results .

7. Need of compensation management
MOTIVATION
NEED
COMPENSATION
SATISFACTION
EMPLOYEE
RETENSION

8. Cont…
o A good compensation package is important to
motivate the employees to increase the organizational
productivity .
o The lucrative compensation will also serve the need for
attracting and retaining the best employees .
o Unless compensation is provided no one will come and
work for the organization .
o Thus , compensation helps in running an organization
effectively and accomplishing its goals .

9. Cont…
o Unless compensation is provided no one will come and work
for the organization .
o Thus , compensation helps in running an organization
effectively and accomplishing its goals .
o Salary is just a part of the compensation system .
o The employees have other psychological and self
actualization needs to fulfill , thus , compensations serves the
purpose .
o The most competitive compensation will help the
organization to attract and sustain the best talented
employees

10. Types of compensation
 Direct Compensation
o Wages
o Salaries
o Commissions, Bonuses, Gainsharing, Profit Sharing
 Indirect Compensation
o Pay for Time Not Worked (vacation, sick leave, holidays,
o etc.)
o Insurance Coverage (medical, dental, life, etc.)
o Income Security (pensions and disability)
o Services(education assistance, child care, recreation,
discounts, etc.)

11. Salary slip
o Pay slip is given monthly , with that particular months (Earning
, Gross Earnings) and also (Deductions ,total Deductions) with
total net pay.
o This structure of pay slip would let us know how much we have
earned & how much it has been deducted category wise (basic
,HRA ,LTA ,Medical,PF,ESI,ITetc)from our monthly income.
o Pay slip is tabular representation of all salary/wage/compensation
details. Every employer is bound to distribute the salary slip
before disbursement of salary or on the day of issuing salary.
o Salary slip format may vary from employer to employer. it shows
all deductions, taxes etc.
o Finally it shows the NET (ie. Take home salary )salary for
employee.

12. SALARY SLIP STRUCTURE
Pay slip for the month of April 2012
Emp. No. : L&T12 Name : Mr. Rane Days worked : 29
INCOME DEDUCTIONS
Basic 3176 .00 Prov. Fund 301.00
H.R.A 159.00
E.S.I.C 60.00
Prof. tax 60.00
Loan 0.00 NET SALARY PAYABLE : 2912
Conveyance 87.00 Advances 0.00
Medical 0.00 Income tax 0.00
Other allow. 0.00 Transport 0.00
Labour welfare 0.00
GROSS SALARY : 3422 TOTAL DEDUCT- 501.00

13. EMPLYOEES COMPENSATION
PACKAGES
Wage/ Salary:
a) Dearness allowance(DA)
b) House rent allowance(HRA)
c) City Compensatory allowance (CCA)
d) Transport allowance (TA)
 Fringe benefit.
 Perquisites
 Incentives
 Non-monetary benefits

14. Fringe benefits
o Fringe benefits are compensations made to an employee beyond
the regular benefit of being paid for their work.
o Some fringe benefits are fairly standard, such as offering a few
days of sick time or paid vacation time.
o Key executives in large companies might also enjoy fringe benefits
like use of time-share condominiums, paid continuing
education, use of a company jet, use of a company credit
card, discounted or free health club memberships, and a
significant amount of paid vacation.
o Most people who work full time in the US could probably not get
along without fringe benefits. For example, offering health
insurance to employees, where the employer pays part of the
insurance is a typical example of fringe benefits.

15. Cont…
o In fact, in fields where there is a high demand for workers, such as
nursing and teaching, some unusual fringe benefits may be offered to
attract employees.
o A few unusual fringe benefits offered by school districts have been paid
housing, or use of private lakes for fishing.
o More likely are paid incentives for joining a teaching staff such as
hiring bonuses, offers to fund continuing education so teachers get
higher degrees and thus higher pay, or offering mentor programs for
new teachers.
o Some companies also pay fringe benefits for those who work night or
swing shifts. These fringe benefits may be in the nature of a 10—30%
increase of base pay for working a non-standard shift.
o Blecher-has defined fringe benefits as “any wage cost not
directly connected with the employees productive effort
, performance , service or sacrifice”

16. Types of fringe benefits
o For Employment Security :
o For Health Protection:
o For Old Age and Retirement:
o For Personnel Identification, Participation and
Stimulation:
o For Transport Facilities
o For Housing Facilities
o Eating Facilities
o For Child Care, etc
o The fringe benefits are categorized as follows:
o a)Payment for Time Not worked:
o b)Extra Pay for time Worked:

17. Features of fringe benefit
o Different from regular wages.
o Useful but avoidable expenditure.
o Not directly linked with effort
o Beneficial to all employees
o Voluntary to character.

18. Fringe benefit in Indian scenario
o With the technological developments taking place at a higher
rate, the salary packages are too increasing at a much higher rate.
Pay packages in India have witnessed an increase of more than 14%
in 2006 over last year’s salary packages.
o The compensation package comprises of monetary and non-
monetary benefits that includes salary, special allowances, house
rent allowance, travel allowance, mobile allowance, employee stock
options, club memberships, accommodations, retirement benefits
and other benefits.
o Globalization is being considered as the cause for such salary hikes.
The establishment of multi national companies and privatization
has led the Indian industry to witness higher salary package.

19. Cont…
o With the immense competition of attracting and retaining
talented human resource, compensation package is the
only motivation factor available with the organizations
be it Indian origin organizations or foreign-owned
multinationals.
o With the high attrition rate organizations are increasing
their salary packages to attract and retain talented
human resource.
o In the race, India has begged first position followed by
Lithuania and China.

20. Performance linked incentives
A Performance Linked Incentive (PLI) is a form of payment
from an employer to an employee, which is directly related to
the performance output of an employee and which may be
specified in an employment contract.
PLI may either be open ended (does not have a fixed ceiling) or
close ended (has an upper ceiling which is normally stipulated
in the employment contract)
Open ended incentives are normally applicable revenue
generating activities (e.g., Sales) and Close ended incentives
are associated to support functions (e.g., Operation, Human
Resources, Administration etc.)

21. Meaning of Incentives Plans
o An incentive program is a formal scheme used to promote or
encourage specific actions or behavior by a specific group of
people during a defined period of time.
o Incentive programs are particularly used in business
management to motivate employees, and in sales to attract
and retain customers.
o Scientific literature also refers to this concept as pay for
performance
o According to G. K. Suri, “a wage incentives scheme is
essentially a managerial device of increasing a worker’s
productivity. Simultaneously, it is a method of sharing gains in
productivity with workers by rewarding them financially for
their increased rate of output.”

22. Features of good incentives plans
o Simplicity :
o Promote initiative :
o Definiteness and Flexibility :
o Prompt payment :
o Properly communicated to employees :
o Wide coverage and equitable :
o Guarantee of minimum wage payment :
o Justice to employer and employees :
o Acceptable to workers :
o Grievance procedure :

23. Types of incentives plans
(A)Individual Incentives Plans
o Rowan plan
o Hasely Plan
o Emerson’s Plan
o Tyalor Differentiate Rate System
o Gnatt task and Bonus Plan
o Bedeaux Point premium plan
o Scaion plan
o Haynes Plan
o Merric’s Multiple Piece Rate plan
(B)Group Incentives plans
o Profit sharing
o Bonus payment